Jane Monaghan is a senior review consultant in the Education Finance Support team. Jane has a degree in accounting and conducts independent reviews for academy trustees and school governors concerning the appropriateness of financial controls in operation, providing the audit committee and governors with an informative report and recommendations to strengthen controls. Jane also assists in ensuring the annual reviews are compliant with current DfE policy and best practice guidelines.
Multi-academy trusts, trustees, governors, headteachers: what assurance do you have that your school or academy is compliant with statutory internal control requirements and that your procedures are robust enough to prevent fraud or misappropriation of funds?
My team, who carry out Internal Controls Evaluation reviews, have found that corruption in schools and academies is becoming more common – examples include embezzling petty cash or money for trips, and wages and overtime being falsely claimed.
We advise schools and academies to ensure that they have sound oversight and regular monitoring of processes to enable them to spot fraud and irregularity.
The Academies Financial Handbook by the Education and Skills Funding Agency specifies that academies must establish a control framework that recognises expectations about governance, standards and openness. An academy’s internal control framework must include a process for the independent checking of financial controls, systems, transactions and risks.
One example of an essential control is the circulation of financial accounting system-generated data to trustees and governors which will avoid the risk of data being manipulated.
Testing carried out as part of an internal controls evaluation review will determine whether staff and governors are adhering to their individual level of authority included in the school or academy Scheme of Financial Delegation and Financial Regulations.
A key element of internal controls is to ensure that no one person has complete control over all phases of an important transaction or process. For example, to ensure appropriate separation of duties, a finance officer responsible for processing invoices received and generating cheque and/or BACs payments, should not also be an authorised bank signatory.
Where schools are undergoing restructuring through, for example, a single academy trust joining an existing multi-academy trust or through a maintained school converting and joining an existing multi academy trust, risks may increase in the short term as a result of changing systems and processes.
Formal reporting of internal control issues will drive trustees and governors to devise an action plan and timeline to address any internal control weaknesses identified.
So what’s the answer? A regular, independent review of controls will provide multi-academy trusts, trustees, governors and headteachers with assurance that schools and academies are safeguarding against fraudulent or improper use of public money and assets.
For academies, satisfactory internal controls evaluation reports will also evidence adherence to the internal controls regulatory requirements specified in the Academies Financial Handbook.